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From the moment he arrived at the White House, Orszag (red tie) met early and often on health reform, public records show.

There was much debate and second-guessing last August when the Obama Administration’s budget director, cabinet member Peter Orszag, resigned from office.

Lest there be any lingering suspicion that Orszag left because of disappointment with the Obama health plan, public records obtained by The Hill show quite the opposite.

Orszag was intimately involved in the creation of the final version of health reform, and cutting Medicare spending growth was at the top of his to do list.

From the moment he arrived, Orszag’s meetings on health reform filled his calendar, the records showed. Some were with other administration officials, many were with major insurers, think tanks and clinics.

It was a logical progression. During the late years of the Bush administration, Orszag headed the Congressional Budget Office.

There, he warned of deficit doom as Medicare Part D changes and Medicare Advantage gave seniors generous new benefits that were not paid for with any clearly designated funding source – like taxes. Unsustainable growth in health spending, he argued, was sinking the budget. He called for Medicare spending cuts loudly and often.

In shaping health reform, Orszag thus played a key role in pushing for the powerful Medicare spending panel that has provided so much grist for the health care fear-and-panic mill. In an interview with FOX News in July 2009, he was quite plain about his view of its importance to the nation’s fiscal health.

“I think the single most important thing is this proposal that we have for an independent commission to help bring down costs over the long haul,” he said.

The panel is called “the Independent Payment Advisory Board,” and made it into the final version of the Affordable Care Act, though politicians on both sides of the aisle now say they want it yanked. If left unchanged, it will work like this:
Whenever per-capita health spending exceeds target rates (which will be pretty much every year), the advisory board must tell Congress what it should do to lower Medicare spending. By design, these recommendations will be very difficult for Congress NOT to implement.

The law says the U.S. Department of Health and Human Services MUST implement the board’s findings unless Congress specifically comes up with its own equivalent cuts, and its alternative isn’t vetoed.

This is actually a very big deal.

According to analysts at the Kaiser Family Foundation, “The establishment of the board represents the first time that the Medicare program will be subject to spending limits, with statutory requirements to achieve savings targets.”

The board’s first recommendations will be made in 2014, to take effect in 2015.

Given how powerful this board will be, one can imagine seats will be highly sought-after. So who will staff it?

According to Kaiser: “The Board will consist of 15 full-time members appointed by the President and confirmed by the Senate for six-year terms. A 10-member consumer advisory
council will be established to advise the Board.”

Even with these restrictions, the Congressional Budget Office found that the board will likely shave $18 billion off of Medicare spending by 2019. For some perspective, Medicare now costs the U.S. about a half-trillion dollars per year.

Physicians worry that the advisory board will cut their reimbursements rather than tackling tougher fixes.

So where will the savings come from?

Orszag has cited studies suggesting about 30 percent of health care spending is wasted on ineffective or inappropriate care. He has also criticized the medical technology arms race that leads every clinic to have its own MRI machines, every hospital to want to offer robotic surgery, costly high-tech radiation services, and so on.

But physicians fear that the board’s mandate to find savings on a year-by-year basis will keep it focused on short-term fixes, which will lead it to cut doctors’ reimbursements.

This is one of the greatest areas of lingering uncertainty in health reform, and likely to be a political football after the elections. So now the question to ask may not be, “Why did Orszag leave?” (For that, stick with the New York Post.) but will his most significant legacy, the Medicare Independent Payment Advisory Board, live long past his tenure?